Correlation Between 3M and JPMorgan Active

Can any of the company-specific risk be diversified away by investing in both 3M and JPMorgan Active at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 3M and JPMorgan Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M Company and JPMorgan Active Value, you can compare the effects of market volatilities on 3M and JPMorgan Active and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in 3M with a short position of JPMorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and JPMorgan Active.

Diversification Opportunities for 3M and JPMorgan Active

0.88

Correlation Coefficient

3M  JPMorgan Active

Very poor diversification

The 3 months correlation between 3M and JPMorgan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and JPMorgan Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Active Value and 3M is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on 3M Company are associated (or correlated) with JPMorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Active Value has no effect on the direction of 3M i.e., 3M and JPMorgan Active go up and down completely randomly.

Pair Corralation between 3M and JPMorgan Active

Considering the 90-day investment horizon 3M Company is expected to generate 2.11 times more return on investment than JPMorgan Active. However, 3M is 2.11 times more volatile than JPMorgan Active Value. It trades about 0.1 of its potential returns per unit of risk. JPMorgan Active Value is currently generating about 0.22 per unit of risk. If you would invest  13,820  in 3M Company on April 24, 2025 and sell it today you would earn a total of  1,300  from holding 3M Company or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

3M Company  vs.  JPMorgan Active Value

3M Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in August 2025.

JPMorgan Active Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Active Value are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, JPMorgan Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with 3M and JPMorgan Active

The main advantage of trading using opposite 3M and JPMorgan Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, JPMorgan Active can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JPMorgan Active will offset losses from the drop in JPMorgan Active's long position.

The idea behind 3M Company and JPMorgan Active Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.